Polaris Motorcycles

Growth from Polaris' 2016 motorcycle line was one bright spot in today's report. Image source: Polaris Industries.

Polaris Industries (NYSE:PII) may have preemptively reduced its 2015 guidance over a month ago, but that didn't stop shares of the off-road vehicle maker from diving even further after its official report this morning.

Specifically, Polaris plunged Tuesday after confirming that fourth-quarter revenue declined 13% year over year to $1.106 billion. That includes a 33% increase in motorcycle revenue to just under $163 million, which was more than offset by both an 18% decline in off-road vehicle and snowmobile sales to $862 million and a 20% drop from global adjacent markets -- which includes government/military and work and transportation vehicles -- to $81 million. That also translated to an 18% decline in net income to $110.7 million, and -- thanks to $293.6 million spent to repurchase 2.179 million shares in 2015 -- a more modest 16% drop in earnings per diluted share to $1.66.

When all was said and done in 2015, full-year revenue rose 5.4% year over year (9% on a constant currency basis) to $4.719 billion, or slightly above Polaris' reduced outlook for 4% to 5% growth, and diluted net income per share rose 1.5% to $6.75, in line with expectations. North American dealer inventory also met expectations by rising 5%, and off-road vehicle dealer inventory fell 4%, slightly below guidance.

"The strengthening dollar and weakening oil markets combined with an unseasonably warm winter constrained demand for off-road vehicles and snowmobiles," explained CEO Scott Wine, "placing pressure on dealer inventory and forcing us to curtail shipments in the fourth quarter."

The silver lining
There's no denying Polaris' disappointment, especially considering initial guidance provided three months ago called for 2015 revenue growth of 10% to 11%, and full-year earnings growth of 11% to 12%.

But as I suggested in my earnings preview last week, I wanted to know whether consumers were still responding well to Polaris' latest product lines -- at least given the context of this industrywide weakness. Thankfully, Wine also offered a silver lining to the pullback, stating "While 2015 was a difficult year, we did manage to grow market share in each of our businesses and increased sales and earnings per share for the sixth consecutive year."

In particular, investors should be encouraged that all of its businesses have continued to grow their respective market share in the face of these headwinds. In the meantime, Polaris will focus on optimizing dealer inventory, managing operating costs, and continuing to introduce compelling products to consumers. When these markets inevitably rebound, it should emerge a stronger company for it. 

Kick it into low gear
Given "anticipated ongoing weak industry trends in North America," however, management appears to be taking a cautious approach by offering wide financial guidance ranges for the coming year. Polaris now expects 2016 revenue to be in the range of down 2% to up 3% year over year, resulting in a range of $4.62 billion to $4.86 billion, which should translate to net income per share of $6.20 to $6.80. By contrast, analysts' consensus estimates predicted 2016 earnings of $7.00 per share on 2016 revenue near the high end of Polaris' guidance.

As a result, it's hard to blame our short-term-oriented market for bidding down shares again today. But with Polaris stock now trading at just 10.5 times next year's expected earnings, I think the company has what it takes to reward long-term investors willing to watch as it continues to take market share and solidify its industry leadership.

Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Polaris Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.